Five Reasons Financial Advisors Should Be Available For SMEs

Effective management of business finances is a must of small businesses and start-ups in the UK. With a declining economy, it has been advised to all businesses across the country to be prepared for inflation like situation.

In such a situation, it is sensible of companies to accumulate funds well in advance (whether they face financial crisis in future or not). Alternative finance firms have been actively working alongside the UK government to make the SMEs across the country financially sustainable.

But due to the pressure of running a business, most of the small business owners end up neglecting financial matter related to the business. This is where financial advisors come handy. Financial advisors add a significant value to the company and for its owner by providing advices and intelligence on financial matters outside the main activities.

Here are five areas a financial advisor focuses on when they are made available to cater the needs of a small business owner.

1: Insurance Planning

It is important that your business is insured against property losses. One of the most unfortunate and traumatic events for any company is the loss of its owner, the co-owner or a star employee.

These unfortunate events can cause a variety of problems that include

Business closure

A temporary shutdown of business activities

Mandatory buyout of co-owner’s heirs

Large bills of taxes if the business is sold

Here, a financial advisor can help assess the risks. He can assist a business owner to take out certain policies such as life, disability and key person insurance that provides coverage and mitigates financial shortfalls in case of any unfortunate events. With a trustworthy financial advisor by your side you can rest assure that the best deals and most suitable policies are put in place and that your business finances are managed effectively.

2: Managing the Financial Assets of the Business

As the sales grow so will the profits. Small business owners are often so caught up with business activities that they do not have the time for investment research. Because of this, the capital amount earned is stuck in low-returning accounts.

Here a time-constrained business owner can get along with their business owner who can efficiently allocate financial assets along with interest bearing instruments, sock market investments and retirement accounts. This way, the long term financial goals of a small business owner are achieved while they are busy running the business.

3: Employee Retirement Plans

One of the easiest ways a company can retain its star employees is by establishing employee retirement plans along with other benefits. Since the employee retirement plans are time consuming and complex to handle, small business owners usually rely on their financial advisors to set up these policies and maintain the accounts. Once the retirement plans are successfully established in a small company by a financial advisor, the employees can later become direct clients for managing assets outside their retirement accounts.

4: Planning the Exit

There comes a point in life when a small business owner eventually plans to exit their company, either by selling it, transferring the ownership of the company to their family or when they die.

However, having an insurance policy plays a vital role in facilitating an exit in case of death. But when it comes to selling or transferring the ownership, the processes are rather complex and requires knowledge and experience of various factors such as valuation of the company, effects of the sales on employee benefits and taxes.

With a financial advisor by your side, you can develop a strategy that yields the best possible results across all the aspects of your exit.

5: Managing Retirement

After selling or transferring the ownership of a small company, the former owner might have significant financial assets but certainly won’t have enough experience or understanding of managing investments for the retirement. In such a situation, your life-long financial advisor comes handy.

They will manage your investments; also establish a strategy for your estates and replacing the income that was previously generated by your company.

Key Takeaway Points

For financial advisors, working with a small business can be bit complex compared to their role majorly focused only on managing capital. But for financial advisors who willingly want to increase their knowledge and understanding of their clients’ businesses and their long term financial objects, there are certain benefits such as multiple sources for fees, having employees turned into direct clients and financial relationships that can last for years.